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The article appeared in the Holzkurier on 29.11.2022: Timber construction as a negative emission technology(holzkurier.com)
In order to realise the climate potential of timber construction, it must be scaled up globally with all available means: Through the development of sustainable impact investment vehicles and CO2 storage certificates to statutory timber construction support by governments.
In the next 20 years, up to 60% of the world’s building stock will need to be converted and rebuilt. This challenge is an opportunity to develop more sustainable building methods like
scale engineered timber construction and decarbonise the construction industry – which is responsible for 40% of CO2 emissions globally. At the same time, in the timber industry there are
transformative changes: Governments in Switzerland, Europe and America are supporting timber construction with regulatory changes. In addition, thanks to
technical innovations, complex structures such as skyscrapers and motorway bridges can be built from wood. The most recent, important change that highlights the transformation of timber construction and industry is the United Nations Framework on Climate Change (UNFCC). In July, the United Nations (UN) officially recognised Timber in Construction as a carbon storage method for the first time. In a
UN concept paper, timber from sustainable forest management was recognised for its double climate value: First, the forest removes CO2 from the atmosphere,
then the CO2-absorbing wood replaces greenhouse gas-intensive conventional building materials in construction. Thanks to the long-term storage of CO2,
engineered timber construction is now classified as a negative emission technology (NET).
Scaling timber construction with CO2 certificates
In order to exploit the climate potential of timber construction, it must be scaled up worldwide. In 2021, the Swiss Timber Finance Initiative began to develop the methodological
basis for globally recognised, tradable CO2 certificates for timber buildings. These certificates will come onto the market in 2023. This financially incentivises institutional builders, forest owners and investors to build more with wood. The timber construction storage certificate is sold on the CO2 market, which will reach a market volume of around US$ 30 billion by 2030. The potential in this area is enormous, despite the different forest reserves in the countries: in Switzerland alone, around 1 million m3 of additional wood can be used annually. This can happen without reducing the forest area and with simultaneous preservation and maintenance of the forests. The additional Swiss climate potential of timber construction is therefore 1 million t/y of stored CO2.
The transformation of the timber industry
But scaling up timber construction requires more than certificates: the industry, which is facing prolonged growth, must modernise. This will require
billions of dollars of investment. In addition, modern investment vehicles are needed that focus on climate impact. Since the timber turnaround 2020,
opportunities with higher value creation and return opportunities have opened up for investors. These include modern timber investments that focus on the
long-term storage of CO2 in timber construction products. Examples are Timber Industry timber funds, timber construction mortgages or even timber construction-specific real estate funds.
//Thomas Fedrizzi, Co-Founder Timber Finance Initiative, Marisa Steiner, Head of Partnerships Timber Finance Initiative